Small and midsize enterprises (SMEs) are a bit of an enigma, and more than a few business owners – and investors – have been driven crazy trying to determine how a company compares to competitors or how an influx of capital could help them.
If only there was a “what-if machine” where you could input a company’s data and get back valuable financial information that could improve decision-making and the business itself. Well, now there is.
Self-Rating has developed a rating-as-a-service (RaaS) solution that makes it easier for small to midsized businesses to measure themselves against their competition and highlight their strengths and advantages to potential investors.
Self-Rating uses proprietary algorithms that help users compare their business to peers and even pick up on warning signs and hidden problems, according to Dr. Jake Geller, co-founder and CEO.
“This is a product that’s only been available for Wall Street in the past. Now we’re taking it to Main Street,” Geller says. “There are hundreds of thousands of companies, and Self-Rating can provide valuable data about the creditworthiness of small companies for whom today there’s no easy way of evaluating or understanding them.”
Companies of all sizes, as well as financial lenders, want a more complete picture of their financial performance. Self-Rating analyzes a business’ data against a global database to help business owners identify strengths, weaknesses, and value, adds Ran Gazit, co-founder and chairman of Self-Rating. Users also can manipulate the data to factor changes in the business to predict the financial impact, he said.
“For example, an SME can go to a lender and say I want to do this and if I do, this will be the result. It gives the business and the lender some guidance on what will happen,” Gazit said.
Such information is critical to both SMEs and lenders, he added: “Credit strangulation is impacting businesses around the world right now. People have difficulties with finances. In order to close the gap, we developed this engine to help them understand and improve their financial status.”
Building a better business
Self-Rating is targeting SMEs trying to evaluate themselves or secure investment funding.
“There’s not a lot of information about SMEs. A lot of finance organizations are lending money without enough knowledge about the companies they lend to,” Geller said.
Businesses can also use Self-Rating to evaluate their own customers and prospects, giving executives better visibility into their supply chain and customer relationships.
“It gives you a sense of strengths and weaknesses so you can build a better business plan based on who you do business with,” Geller said. “You can check yourself against another company and say I’m an ‘A’ compared to this other company’s ‘A-,’ so why am I paying twice the interest? It empowers small and medium-sized businesses to negotiate with their finance providers.”
Self-Rating expects to add more functionality, such as specific suggestions, training, and more detailed reporting, Geller said.
“We leverage in-memory database technology and predictive analytics interfacing to an ERP system, along with outside data through our proprietary algorithms to calculate an SME’s overall financial performance,” Geller said. “This will transform SMEs. They’ll have direct links to EDGAR and to other jurisdictions for similar information. This is much different than a rating agency. We’re dealing with actual intelligence that can make companies better. Ultimately, this will improve the opportunities for small-to-midsize enterprises to grow their business. This could turn the tide of the decline in small businesses many developed countries have seen over the last decade.”